Accelerated depreciation seen as key to closing Greece's investment gap

Introducing accelerated depreciation rules could significantly boost economic activity by encouraging new investment through improved business liquidity, with positive spillover effects on GDP, public revenues and employment, according to a study by the Industrial and Energy Economics Laboratory at the National Technical University of Athens (NTUA), commissioned by the Association of Industries of Central Greece.The study argues that faster depreciation allowances could help bridge Greece’s persistent investment gap, which it attributes to rigid regulations under the current tax framework, particularly for small and medium-sized enterprises.As European countries compete to preserve and strengthen their industrial base, accelerated depreciation has emerged as a key policy tool, reflected in recent initiatives by the European Commission as well as national measures adopted by individual member states. According to the study, countries that have implemented the measure have generally reported positive investment outcomes.A comparison with other European economies highlights the need for Greece to adopt more flexible and competitive policy instruments to better support its productive sector, the report says. Greece’s current legal framework, which applies a fixed 10% annual depreciation rate requiring a full decade to write off industrial equipment, places domestic businesses at a competitive disadvantage relative to their European peers and contributes to the country’s investment gap.Angelos Tsakanikas, professor of Economic Evaluation of Technology, Innovation and Entrepreneurship Systems at NTUA’s School of Chemical Engineering and head of the university’s Industrial and Energy Economics Laboratory, said accelerated depreciation plays a strategic role in strengthening productivity, competitiveness and Greece’s industrial base.“Accelerated depreciation does not represent a cost to the state budget but rather deferred tax revenue, with any temporary loss fully offset by higher investment and the broader multiplier effects on the economy,” Tsakanikas said.